Japan's Aioi Insurance Headed for Loss on Subprime

TOKYO (Reuters) - Aioi Insurance Co (8761.T), Japan's fourth-largest non-life insurer, said it now expected to fall into the red this year with losses on subprime-related investments expected to balloon to about $857 million.

Big banks such as Mizuho Financial Group (8411.T) have also been hit hard by losses on investments tied to the crumbling U.S. subprime mortgage market, but Aioi is the first Japanese financial institution to say subprime would push it into a net loss.

Aioi said that it now expected to suffer 92 billion yen ($857 million) in suprime-related losses in the current business year to March, leading to a group net loss of 4 billion yen instead of a previously forecast profit of 16.5 billion yen.

Aioi said that paper losses on U.S. subprime mortgage investments stood at 67.5 billion yen as of the end of December, up from 25.2 billion yen as of the end of September.

Aioi said that its total exposure came to 110.2 billion yen.

(Reporting by Nathan Layne)